Savings interest, basic advice wanted

NotRichAtAll

As above after some basic advice from people more savvy than myself.

I have worked all my life and not always been in a position to save, however i have got myself 65k stashed in various interest earning accounts all high street banks. Last year is the 1st year i have earned too much interest and the tax man quick as a shot wanted his cut, so he is now clawing back a measly £50 via my new tax code he kindly gave me.

Last year was also the 1st year i took out an isa, well actually 2 isa's 1 has 15k the other has 5k.

The rest of my money say 38k of it is spread over various interest paying accounts Marcus, chase, Kroo 1st direct savings etc and the remaining 7k is in non interest bearing accounts.

Now its seems to me like you are not expected to be able to save and if you do find yourself able to save your going to get a % taken from you.

Is it just a case of giving the tax man his cut and plodding along or am i missing something? i have considered buying a few Britannia's or Sovereign's for the grand kids when they turn 18 but again am not sure if this is a good road to go down (the oldest is only 6 now)

any advice appreciated, Thanks

Kim_13

You say that you took out ISAs last year, so if this was indeed pre 6th April this year then you should place another £20K in an ISA now using your 2025/2026 allowance. Then you only have £25K in taxable accounts, on which you would have to earn over 4% interest to become liable for tax as a basic rate taxpayer (£25,000 × 0.04 = £1,000, which is the PSA limit.)

If you expect to have further savings or earn more than 4% on the £25,000, you may wish to consider Premium Bonds as these are also tax free.

eskbanker

NotRichAtAll said:

Now its seems to me like you are not expected to be able to save and if you do find yourself able to save your going to get a % taken from you.

Is it just a case of giving the tax man his cut and plodding along or am i missing something?

You're not the first to begrudge paying tax on savings interest as a point of principle, but in general it'll make more sense to focus on maximising your return rather than trying to minimise how much goes to HMG, in that, for example, it'll generally be better to receive 80% of a good rate rather than 100% of a poor one.

So if you currently have £7K in non-interest accounts, chances are that getting that somewhere more productive would be a prudent first step.

SiliconChip

With £38K in savings there's no real need to spread it between providers as it's below the FSCS limit, you may as well have it all with the one paying the best rate (unless there are limits on how much you can have in an account, such as £4K at 6% in the Santander Edge Saver). Then just keep an eye on what the best rates are and be prepared to shift your money if somewhere offers a better rate. 

The latter is something you should also do with your ISA cash, if a better rate becomes available and you can move it (without paying a penalty) then do so, making sure that you do an ISA transfer initiated by the receiving institution. 

I suspect that if you are able to place more funds in an ISA for the current year your taxable interest will come down below the starting rate for savings (although that depends on your other income) so you may well not be paying any tax for 2025/6 anyway.

NotRichAtAll

Kim_13 said:

You say that you took out ISAs last year, so if this was indeed pre 6th April this year then you should place another £20K in an ISA now using your 2025/2026 allowance. Then you only have £25K in taxable accounts, on which you would have to earn over 4% interest to become liable for tax as a basic rate taxpayer (£25,000 × 0.04 = £1,000, which is the PSA limit.)

If you expect to have further savings or earn more than 4% on the £25,000, you may wish to consider Premium Bonds as these are also tax free.

That was my bad i meant last year in general, the isa's 1 was 16th april 2025 the other was 14th april 2025

So with isa's at the end of the isa period do you need to remove the initaial amount in it or do just whack more money in it when the new term starts? ( told you i needed help :

FrugaiMacDugal

Have a read here before you rush into anything.

Yorkie1

NotRichAtAll said:

Kim_13 said:

You say that you took out ISAs last year, so if this was indeed pre 6th April this year then you should place another £20K in an ISA now using your 2025/2026 allowance. Then you only have £25K in taxable accounts, on which you would have to earn over 4% interest to become liable for tax as a basic rate taxpayer (£25,000 × 0.04 = £1,000, which is the PSA limit.)

If you expect to have further savings or earn more than 4% on the £25,000, you may wish to consider Premium Bonds as these are also tax free.

That was my bad i meant last year in general, the isa's 1 was 16th april 2025 the other was 14th april 2025

So with isa's at the end of the isa period do you need to remove the initaial amount in it or do just whack more money in it when the new term starts? ( told you i needed help :

Are those dates correct? Did you take out two cash ISAs after 6 April 2025? So you've used your current year's ISA subscription of £20K in total?

When they come to an end of their fixed term, if applicable, then your provider will contact you about a month before the end, to let you know your options. Generally, they are: 1) roll it into another fixed rate cash ISA with that provider; 2) transfer it out to another provider; 3) do nothing at all - in which case it will probably change to an easy access ISA with a very poor interest rate (but some providers automatically roll it over into another fixed rate ISA - check your T&Cs).

You can add fresh cash at the same time as doing these, whether with the original provider, the transferred provider, or a third provider.

Whatever you do, do NOT withdraw the money from the cash ISAs (unless you want to spend it). If you want to move it to another provider, go to them, open an ISA with them, and ask them to transfer your old one to them. That way, the money stays within the ISA tax-free protective wrapper.

NotRichAtAll

Yorkie1 said:

NotRichAtAll said:

Kim_13 said:

You say that you took out ISAs last year, so if this was indeed pre 6th April this year then you should place another £20K in an ISA now using your 2025/2026 allowance. Then you only have £25K in taxable accounts, on which you would have to earn over 4% interest to become liable for tax as a basic rate taxpayer (£25,000 × 0.04 = £1,000, which is the PSA limit.)

If you expect to have further savings or earn more than 4% on the £25,000, you may wish to consider Premium Bonds as these are also tax free.

That was my bad i meant last year in general, the isa's 1 was 16th april 2025 the other was 14th april 2025

So with isa's at the end of the isa period do you need to remove the initaial amount in it or do just whack more money in it when the new term starts? ( told you i needed help :

Are those dates correct? Did you take out two cash ISAs after 6 April 2025? So you've used your current year's ISA subscription of £20K in total?

Yes those dates are correct, Yes a total of 20k in them

kimwp

If it helps, tax is used for (among other things), the NHS, which most people use at one point or other. 

Kim_13

NotRichAtAll said:

Yorkie1 said:

NotRichAtAll said:

Kim_13 said:

You say that you took out ISAs last year, so if this was indeed pre 6th April this year then you should place another £20K in an ISA now using your 2025/2026 allowance. Then you only have £25K in taxable accounts, on which you would have to earn over 4% interest to become liable for tax as a basic rate taxpayer (£25,000 × 0.04 = £1,000, which is the PSA limit.)

If you expect to have further savings or earn more than 4% on the £25,000, you may wish to consider Premium Bonds as these are also tax free.

That was my bad i meant last year in general, the isa's 1 was 16th april 2025 the other was 14th april 2025

So with isa's at the end of the isa period do you need to remove the initaial amount in it or do just whack more money in it when the new term starts? ( told you i needed help :

Are those dates correct? Did you take out two cash ISAs after 6 April 2025? So you've used your current year's ISA subscription of £20K in total?

Yes those dates are correct, Yes a total of 20k in them

In which case you might put a greater sum into Premium Bonds now and then move it into an ISA from 6th April 2026 when you will get a new ISA allowance (although that allowance may well be lower than £20K.) 

If the ISA allowance is cut significantly, it will be important going forward to max it out each and every year even if the rate available is lower than that in ordinary savings accounts after tax, as money in an ISA remains tax free year after year. There will be posters here with six figure sums in ISAs.

xylophone

If you wish to gift money to your grandchildren for their use when they turn 18, do you know whether their parents have opened JISAs for them?

You could contribute.

https://www.gov.uk/junior-individual-savings-accounts